French Equity Index Faces Potential Bearish Reversal Amid Economic and Political Uncertainty
Market Overview
European equity markets are under pressure as concerns over economic strain from trade tariffs and political uncertainties in relations with the US weigh on investor sentiment. The French equity index, which has been on an upward trajectory for the past two and a half months, is now facing signs of momentum exhaustion.
On Tuesday, risk sentiment deteriorated, leading to a broad sell-off in European equities, pushing key indices into negative territory. Investors remain cautious as they assess the impact of trade policy shifts and the potential for economic slowdown.
Technical Analysis
The French stock index has been in a steady uptrend, but recent price action suggests that bullish momentum is fading. Sellers have challenged the February 28th support level, which serves as a critical threshold for determining the index’s next move.
A clear break below this level would signal a temporary end to the prevailing uptrend, increasing selling pressure and setting the stage for a potential move towards the first major support at 7927.61. Should downward momentum persist, further declines could extend towards 7827.97 and 7717.95, which align with 161.8% and 200% Fibonacci extension levels derived from the most recent upward swing.
Conversely, if buyers step in to defend the current support, the index would need to reclaim the 8293.95 resistance level to reestablish a bullish structure. Failure to do so could keep selling pressure intact, reinforcing the likelihood of a deeper correction.
Momentum indicators confirm a shift in sentiment, as RSI and MACD continue to decline within the bearish zone, highlighting an increase in selling strength.
Key Technical Levels
- Resistance 1: 8115.97
- Resistance 2: 8293.95
- Support 1: 8005.95
- Support 2: 7927.61
- Support 3: 7827.97
- Support 4: 7717.95
- Support 5: 7539.97
Fundamental Drivers
While European earnings revisions have stabilized following the sharp downturn in October 2024, corporate growth forecasts remain cautious. Consensus estimates project an 8% earnings expansion for 2025 and a stronger 14% growth for 2026.
Market sentiment is also shaped by trade concerns and geopolitical risks, as the ongoing friction between the European Union and the United States raises uncertainty over potential economic retaliation. Investors will closely monitor trade negotiations and economic indicators to gauge the longer-term impact on European equities.
Conclusion
The French equity index is at a critical juncture, with price action testing key support. A break below 8005.95 would confirm a near-term trend reversal, while a rebound above 8115.97 could restore bullish momentum. Market participants remain cautious ahead of key developments in trade policy and corporate earnings forecasts.
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